Mark A. Berman

Who will pay for e-discovery expenses will often inform a litigation strategy, and recent case law provides litigators with guidance on the allocation of e-discovery costs. Litigators seeking the production of electronically stored information (ESI) need to appreciate up front that non-party e-discovery expenses, including, significantly, attorney review time and vendor costs, may have to be paid by the requesting party as set out in Walt Disney Co. v. Peerenboom, 2019 N.Y. Misc. LEXIS 337, 2019 NY Slip Op 30181(U) (Sup. Ct. N.Y. Co. Jan. 17, 2019). Also opposing counsel's attorney time in analyzing an ESI production "do-over" ultimately may have to be paid by the producing party as noted in 255 Butler Assoc. v. 255 Butler, 2019 N.Y. Misc. LEXIS 629, 2019 NY Slip Op 30372(U) (Sup. Ct. Kings Co. Feb. 19, 2019). If a party is having difficulty producing ESI that should be in its possession, custody or control, as suggested in Park v. Song, 2019 N.Y. Misc. LEXIS 4243, 2019 NY Slip Op 32329(U) (Sup. Ct. N.Y. Co. July 30, 2019), it can seek to obtain such ESI from non-parties, but the requesting party needs to be prepared to potentially reimburse the non-party for expenses associated with such production. Who will pay for a court approved third-party data mining company or an expert in information technology in order to examine email accounts and the circumstances under which ESI may have been retained or deleted, as Vasquez-Santos v. Mathew, 168 A.D.3d 587 (1st Dep't 2019) and Brandsway Hospitality v. Delshah Capital, 73 A.D.3d 457, 2019 NY Slip Op 04483 (1st Dep't June 6, 2019), must be taken into account when an application seeking court approval of same is sought.

Non-Party Vendor Costs and Attorney Fees

In Walt Disney, in a proceeding commenced pursuant to CPLR 3101, the motion court granted petitioner a protective order quashing in part a subpoena duces tecum holding that respondent is responsible "for all reasonable production expenses" incurred by petitioner in responding to the subpoena, which may include attorney fees in its review of potentially responsive documents and/or data-vendor costs. The court noted:

Pursuant to CPLR 3111 and 3122(d), the "reasonable production expenses of a non-party witness shall be defrayed by the party seeking discovery." If a court finds that a non-party is required to produce information, including electronically-stored information … the "court should allocate the costs of this production to [the party seeking the discovery]." Tener v. Cremer, 89 A.D.3d 75, 82, 931 N.Y.S.2d 552 (1st Dept. 2011). The court should consider in that allocation the cost of disruption to the business operations of the nonparty and any delay in making the ESI discovery demand. Id. While specific reference to attorneys' fees or data-vendor costs is omitted from CPLR 3111 and 3122(d), the court's review of the case law did not reveal any prohibition on the allocation of such fees or costs. Moreover, the Rules of the Commercial Division of the Supreme Court specifically allow for the allocation of such fees and costs "in accordance with Rules 3111 and 3122(d) of the CPLR." 22 NYCRR §202.70(g), Comm. Div. Rules, Appendix A, Guidelines for Discovery of Electronically Stored Information From Nonparties, V., A & B.

On a motion to compel, the motion court in Park ordered defendants to produce certain ESI, but stated that "[t]o the extent it would be more convenient for defendants to obtain these records directly from the POS companies, they may do so in lieu of attempting to locate them among their unproduced ESI. However, if defendants do this, they will have to pay whatever associated costs are incurred since the records are within their possession, custody and control."

Attorney Fees

In 225 Butler, after conferencing the ESI dispute and issuing two orders and granting defendants a "re-do" on their ESI production, the motion court held:

[p]laintiff should not have to bear the cost of Defendants' poor ESI search and review process by having to pay their staff or experts again to re-review Defendants' production. The Court will therefore entertain an application for reasonable costs associated with Plaintiff having to re-review Defendants' ESI production at the appropriate time.

Court Approved Experts

The First Department in Vasquez reversed the motion court and, while it did not rule on which side would pay for the retention of the mining company, it granted defendant's motion to compel access by such a company to "plaintiff's devices, email accounts, and social media accounts, so as to obtain photographs and other evidence of plaintiff engaging in physical activities."

Finally, on a motion to dismiss for spoliation of ESI, the First Department in Brandsway ruled that it was a "sound exercise of the [motion] court's discretion to deny, at this juncture" such spoliation motion, noting that the lower court was "appropriately concerned about plaintiff's principal's selective use of emails from accounts that had been largely deleted." As such, the court sustained the motion court's ruling to refer "the issues to an expert in information technology to examine various email accounts, servers and domains to determine who deleted emails, when they were deleted, and whether they could be retrieved."

Mark A. Berman is a partner at Ganfer Shore Leeds & Zauderer and chair of the New York State Bar Association's Committee on Technology and the Legal Profession. He was the founding co-chair of the Social Media Committee of NYSBA's Commercial and Federal Litigation Section.